The trends that will shape programmatic video in 2015

Matt Von der Muhll , SpotXchange MD
By Matt Von der Muhll , SpotXchange MD | 19 December 2014

It’s been a big year for video, with the amount of content produced exploding and the ad dollar following closely behind. The world is becoming an increasingly visual place. Photos, video and emojis are replacing plain text, developing an expectation among consumers of content that is visually based.

But what we’ve seen so far is only the beginning. According to IPG Mediabrands' intelligence unit, Magna Global, online video ad spend will quadruple over the next five years, up from $200 million to $845 million in 2019.

Online publishers and advertisers alike are looking to video as the next big revenue driver

At the same time, the efficiencies and targeting strengths of programmatic ad buying is capturing the market. A relatively new, and sometimes difficult to grasp system, programmatic currently accounts for around one-fifth of online video inventory sales in Australia. By the end of next year, SpotXchange forecasts over half of online video ad slots will be traded programmatically.

The growth curve will be steeper than display advertising’s for simple reasons. Video sits in a sweet spot for automated trading. It came into a market where DSPs (demand-side platforms – software used to automate media buying) and programmatic platforms already existed, at a time where data and automation are transforming ad targeting.

Still in its infancy, programmatic online video is set for a big year in 2015. Here are the trends SpotXchange expects to shape the year ahead.

Premium inventory to surge, big publishers will on-board, CPMs set to climb

Slow to the table, the big publishers of Asia Pacific now have their wheels in motion, recognising the power of programmatic to maximise inventory sale and automate campaign delivery. As a result, more premium inventory will stream through programmatic pipes, in some cases boosting CPMs from between $10 to $30 to upwards of $40. On surface level this may seem like added expense, but ultimately automated trading ensures both parties maximise gain from the exchange, be it public or private. Brands seeking to align with top-tier placements aren’t expected to baulk at the price tag of premium inventory.

Online publishers and advertisers alike are looking to video as the next big revenue driver

Australia is already a world leader in mobile programmatic growth, with available mobile video ad slots on SpotXchange’s marketplace up 755% between January and October this year. Praised as a potent mover of the dial for brand building and cut-through, brands are looking towards mobile as the next darling of the ad world.
With consumption increasingly moves toward mobile devices, publishers will upgrade their technology to ensure their inventory is optimised for mobile, consumable on any device at any time. The ultimate medium for interaction, look for rich media video ads to come into play. The long anticipated year of mobile video has definitely arrived.

Catch-up TV will shift from under-utilised opportunity to publisher cash cow

Currently faced with user experience issues like poor frequency capping, unstable player sizes and unreliable sound, catch-up TV represents a huge additional premium inventory opportunity for publishers. Expect broadcast networks to invest in the technology to capitalise on what is currently under-utilised premium inventory in 2015.

More big brands will set up in-house trading desks

Market leaders have invested heavily in data plays to build a single view of their customers to automate targeted, relevant communication. Many, like Foxtel and Telstra, have set up internal trading desks, and whispers in the market suggest more big players are angling for the greater control in-house, automated ad buying affords. The role of agencies and trading desks will evolve from control over the licencing for programmatic marketplaces to more of an operations support capacity.

The use of data will become more sophisticated, customer and other data streams to integrate

Taking programmatic in house will set a new precedent for integrating data sets into programmatic buying, giving brands the confidence to overlay customer and other data streams. We can expect the use of data to become more sophisticated across the industry, as hurdles around data ownership are overcome. Publishers and advertisers will work together to formalise a currency for trading and utilising first party data sets, and targeting will become even more granular.

The viewability and brand safety debates will be resolved

The market remains clouded by conflicting perspectives on viewability, with vendors each building their own verification products in lieu of industry guidelines. This will change next year with IAB standards on the way, putting an end to unnecessary inventory wastage and, hopefully, market unease.

Similarly, brand safety concerns are expected to stabilise as the industry gains control of a thorn in its side that’s attracted more air time than it deserved.

As the online video ad market evolves and matures, we can expect to see a consolidation and strengthening of approach under the programmatic banner

Treating “TV” and “online video” as mutually exclusive categories already feels as irrelevant as marking “offline” and “digital” marketing as separate approaches.
One is a complement to the other. The focus will shift to how video ads placed in different formats support each other and resonate with the right audiences. And to truly optimise spend across multiple devices, a heavily fragmented media landscape and various data sets, a single, automated platform will be required.

Matt Von der Muhll

MD

SpotXchange, Asia Pacific

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